With gas prices pushing $4, I knew it was only a matter of time. And now it has finally happened. Our amazing gas rewards program will soon be no more.

For the past 4 years, we’ve put all fuel purchases on a branded credit card. We always had to fill up at the same station, but in return, we received 5% cash back rebates for fuel purchases. I loved the cash back, and paying for gas in one bill every month simplified our budget, so it was win-win.

The letter we received outlined a new “rewards” program. It’s incredibly confusing, but from what I can gather, it seems like for every $100 we spend, we’re given the opportunity to fill up a single tank at a 15-cent-per-gallon discount. The discount accumulates with each $100 we spend. If we accumulate a $1-per-gallon discount (after spending $700 on gas), we can request a $15 statement credit. It shakes out to roughly 2% cash back if we continue to buy gas from this brand and choose the statement credit option.

The thing is, it’s not convenient for us to use this particular gas station anymore. When we first bought our house, the closest gas station happened to be this brand — it was literally right around the corner. Right around Christmas, though, the location suddenly closed. To keep getting our 5% rebate, I was driving clear across town every time I filled up. Without those rebates, it’s not worth the hassle.

We may eventually close the credit card. Since it’s not the first credit card for either one of us, it won’t shorten our credit history. As long as we increase our limits on other credit card accounts to account for the lost lending power, it should have minimal impact on our credit score. For now, though, I think we’ll just stop using it.

I still like the system of paying for gas in one lump sum every month, since that’s what we’re used to. I don’t want to open another credit card, though. So I started exploring my options.

There is another gas station around the corner from our house that offers a reward program. It’s a punch card, and we’ll receive a discount of 5 cents off per gallon for every 100 gallons we pump. I’ll take it!

Next I had to figure out which credit card to use. I looked at the rewards for the credit cards we currently have, and I wasn’t impressed. Each of them offered some kind of rewards program, but it’s one of those deals where you get a point per dollar, and then redeem 5,000 points for a $5 gift card or something. In other words, not a great deal.

There are other cards out there with better rewards, but that would require opening another credit card. So I did some more hunting, and found that American Express has a pretty decent cash rewards card with no annual fee that offers 2% cash back on gas. Since we already had an American Express card, I wondered if I could just switch my account to the cash rewards card without opening a new card. A quick phone call was all it took to make the switch. It’s obviously not as great as our flat 5%, but it’s the best deal I could find without opening a new account.

It’s about the same amount of money that we’d receive if we continued using our current card and bought gas from that brand. The benefit of switching is that we’ll get the reward for buying gas at any gas station, so we’ll have more freedom.

Our plan now is to put all gas purchases on the cash back card, and pay it off every month to avoid interest just like we’ve been doing all along, of course. (Remember: the rewards program isn’t worth it if you’re paying high interest rates or an annual fee.) We’ll also use the reward program at the gas station near our house for fill-ups at home. The bonus to this new system is that we’re no longer required to use the same gas station to get our rebate. This will make things much easier when we’re traveling since we won’t have to hunt for a certain gas station brand, and it will also allow us to price compare and fill up at cheaper stations.

Photo credit

Related posts:

1. Monthly debit card fees make cash-only budgeting smarter than ever

My exciting new teaching job starts in January (yay!). There’s a business-casual dress code, and unfortunately, all of the clothing I wore in my previous life as a professional was also worn in my previous life as a thinner woman who never had a baby (not yay). That means I’m in the market for an entire wardrobe of business-casual clothing.

I’ve never been that into clothing. I wear it to keep decent and warm, and I prefer to buy clothing that looks and feels good, but I don’t have a huge wardrobe. I like to keep a limited wardrobe with basic pieces that can be mixed, matched, and worn for years. I still wear clothes that I bought in college over 5 years ago.

Because I can think of a lot of things I’d rather spend money on than clothes, I’m trying to get creative about building this wardrobe. If you’re looking to build or refresh your wardrobe, here are some tips.

Lose the weight.

This was my first plan a year ago after Judah was born. I have several nice pairs of pants that are about a size too small. I even have a few pieces that are TWO sizes too small from my really skinny newlywed phase (it was short but fabulous). If I could shed the final 20 pounds I gained during pregnancy, I would double my professional attire wardrobe. Sadly, the chances of me losing that much weight in the next three weeks in the middle of the holiday season are slim (no pun intended). So it’s on to plan B.

Assess what you already have.

Many of the sweaters, blouses, and tops I have from before pregnancy still fit reasonably well. I also have a lot of pieces that I wear in casual settings, but they can easily be dressed up with nice slacks or a cardigan. Thanks to those pieces, I’m really only in the market for pants and maybe a few new pieces for layering.

Check the thrift stores.

Because of the nature of dressy clothing (many people own slacks or blouses that they only wear a couple times a year), it’s possible to find really nice dress clothes in excellent condition for unbelievably low prices at thrift stores. I’ve never had much luck with clothing at thrift stores, but I’ll definitely give it a shot.

Never pay retail.

When you see a really flattering top or pair of pants at full price, it can be tempting to buy it if really like it. Don’t do it! I worked in retail, and I can tell you, the turnover for stock at clothing stores is incredibly fast. What’s new and full price today will be marked down to clearance in a matter of weeks. Wait it out and keep a close eye on certain styles. Come the end of the season, that full-price item will be marked down at a fraction of the price. Even if your size is sold out in store, you can usually shop online for more sizes and colors.

Buy basic pieces that can be mixed and matched.

It’s not the most exciting way to build a wardrobe, but it keeps costs down and simplifies things tremendously. Most of my clothing is in dark colors that coordinate (black, grey, dark blue, brown). Every top I own can be worn with either black or khaki pants, which makes it easy to shop for new pieces that coordinate well with pieces I already have. Choose a color palette that suits you, and then look for clothing that will easily coordinate in several different configurations.

What tips do you have for building a professional wardrobe without spending a fortune?

Photo credit

No related posts.

First things first, thank you so much for all the kind wishes for my birthday! I meant to post a thank you yesterday, but our power was out most of the day. I wasn’t about to type a blog post letter by letter on my phone’s screen. Anyway, those of you who left well wishes and kind words really helped make a wonderful day even better. Life as a stay-at-home mom can get a little lonely during the day, and I can’t tell you how much it means to me to have a support network in you, so I won’t even try. Just know I appreciate it so much.

Now before I write this post, I have to get something out of the way. I received no compensation whatsoever for this post. I’m just a Kindle enthusiast, and I want to share with you how much I’ve enjoyed it.

When we purchased our Kindle earlier this year, it was for my husband. He had a fancy new job, and we had some room in our budget for something like that for the first time in a while, so we splurged a little. He wasn’t planning to spend money on e-books. He’s an English professor, and he teaches and reads a lot of classics, which are often available for free once the copyright expires on them. He uses the Kindle mostly to read free books, and he occasionally buys a book if it goes on super sale.

I wasn’t really sold on the e-book thing at first. I really enjoy the feel of a book in my hands and the smell of the paper and blah blah blah I’m a nerd. Besides, I couldn’t stand the thought of paying $5-$10 for an e-book if I could easily borrow it from the library for free.

But about a month ago, there was a series of books that I really wanted to read, and the waiting list at the library was a mile long. All three e-books were available on Amazon for under $5, and I had some SwagBucks gift cards, so I figured I’d give the Kindle a try. I loved it. It was easier to read in bed without contorting myself into strange configurations or flipping back and forth from side to side so I could see the book without holding it up too high (bed readers, you know what I’m talking about).

I was officially converted,  but I still couldn’t bear to pay the high prices for Kindle books when my public library will let me borrow them for free. Less than a week after I finished that series of books, though, I found out that Kindle books are now available through public libraries throughout the country. We have an awesome library system in our area that gives us access to libraries in three different counties through a reciprocal borrowing agreement. They all have different collections of e-books, and while the selection is nowhere near as good as the paper book collection, I’ve already found quite a few books I’m interested in reading, and they’re adding new titles all the time.

With the drop in prices for the new Kindles (which my husband predicted, and now he’s mad that we bought ours months ago for $40 more. Pfft.), now really is a great time to invest in the device if your library offers e-book borrowing. The introductory-level model is only $79*.

So why Kindle? You can read Kindle books on your computer or smartphone without paying for the device. There are also several other e-readers on the market that have been participating in this library-loan program for a while now (the Nook and the Sony e-reader are two popular alternatives). For me, the e-ink screen really makes all the difference. I struggle with insomnia, and research shows that looking at a backlit screen before bed can interfere with sleeping patterns. I definitely notice a difference in the quality of my sleep when I put away my computer and phone and read a book at bedtime instead. The Kindle mimics a real book and has no backlighting on the screen, which means it won’t interfere with sleep.

Aside from the public library, there are a few places I go to look for cheap or free e-books.

Project Gutenberg offers free downloads of classic books for a variety of e-reader formats.

Open Library offers free classic books, too.

The Amazon store has a separate section for free books. They also offer a daily deal on one title every day at a significant discount.

Pixel of Ink publishes a daily newsletter with free or discount e-books.

You can loan Kindle books to friends simply by sending a book to their email address, and it’s automatically returned to you after 14 days — which is nice if you have deadbeat friends who don’t return borrowed books in a timely manner. (Let me know if you wanna swap! I don’t have many e-books to share, but I have a few I’ve bought with SwagBucks gift cards.)

You can also sign up for ebookfling to share books with strangers, but I’ll be honest and tell you I’m not really sure how that works. I don’t think it’s free, but it’s certainly cheaper than buying new books.

As I’ve mentioned, it’s relatively easy to rack up $5 Amazon gift cards with SwagBucks, and that can be a great way to keep yourself stocked with e-books without affecting your budget.

And, of course, don’t forget to check your public library to see if you can borrow Kindle or other e-books from them.

Do you have an e-reader? Where do you find cheap or free e-books?

Asterisks (*) denote referral links. While no one asked me to write this post or compensated me in any way, I earn a small amount of money for Amazon purchases made through my referral link, and I earn extra SwagBucks when people sign up using my referral link. The more you know!

No related posts.

Several people suggested that I hunt for the furniture I want at thrift stores. The thing is, I have been searching for furniture at thrift stores for years. I just don’t seem to have any luck.

Thrift shopping is one of those frugal activities that fascinates me, and I would love to do it, but for some reason, it’s never worked out for me. Couponing and gardening both used to fall under that category. I finally figured out how to make them work for me, so I’m fully aware that the problem is probably me.

I’ve been to a number of thrift stores in North Carolina and now Indiana. I’m looking for the perfect piece of discount furniture that just needs a little TLC. Here’s what I find instead.

Overpriced, poorly made particle board furniture.

The thing about refinishing and fixing up furniture is that you need a solid base with which to work. That cheap particle board stuff that costs under $100 new in a million pieces and assembles with a few Allen screws? It’s not really possible to refinish it. It’s cheap when it’s brand new, it doesn’t last long, and most thrift stores price it around 75-80% of new retail value. That would be fine if it was sturdy, in new condition, and assembled properly. It’s usually not. What I see most often is particle board that’s rickety, falling apart, and still way overpriced. I’d rather spend an extra $20 to buy it new so I can be sure it’s assembled properly and safely.

Dirty, smelly, uncomfortable couches.

Some people don’t like the idea of used couches. Our couch was purchased used for just $30 from an international college student who needed to get rid of his stuff before hopping a transcontinental plane to get home. I found it on a Craigslist-style forum specifically for college students at my school. It’s not the most stylish couch ever, but it was clean, sturdy, and comfortable. A major bonus is that it is an unoffensive neutral brown. It’s worked fine for us for 5 years, and we’ll probably be able to resell it when we don’t need it anymore.

Based on what I’ve seen at thrift stores over the years, I wouldn’t buy a couch at a thrift store. Most of the couches I’ve seen are stained and dirty. They often smell of cigarette smoke, or they’re covered in cat hair (my husband is extremely allergic).

Ugly patterns can be covered with a slip cover, but I’d rather avoid that if I can. I don’t much care for the look of slip covers, and they usually drive me crazy because I’m continually straightening them if they’re not fitted specifically for the couch (I had a slip cover on a couch in college that almost drove me to the looney bin).

Most importantly, the thrift store couches I’ve seen are uncomfortable. Wooden arms, wonky cushions, flat cushions. No matter how cheap it is, it’s not worth it to buy an uncomfortable piece of furniture you won’t use.

Overpriced and too ugly to fix.

I lived with cheap ugly furniture throughout college. My college furnishings were a mish mash of furniture that was given to my roommate and me for free. It didn’t matter that it didn’t match. We were broke, and we needed something to sit on, so we didn’t care. I’m a grown-up now, and I don’t really want to live in a place with mismatched furniture.

Most of the solid wood furniture I see at thrift stores is hideous in a way that can’t be fixed. Giant and clunky. Too big to move with anything but a U-Haul, and too dated to match anything in my house. The problem isn’t that it’s worn or needs to be repainted. The problem is with its design.

I’m not at all saying it’s not possible to find beautiful used pieces and furnish a home with them. I’ve done it. 75% of our furnishings are used. I didn’t find them at thrift stores or Craigslist, though. Most of it came from that awesome college classified website where students practically gave away great stuff just because they don’t want to move it. I haven’t had that kind of luck with used furniture since.

Oh, and “bargain” or “used” furniture stores? Pfft. I can usually find new stuff cheaper than they sell it there. Go figure.

So tell me your tips for finding great furniture at thrift stores. Do you have any luck at Goodwill? Because I find mostly junk at Goodwill, and other consignment or thrift stores are typically just way overpriced. Teach me! I want to learn.

Photo credit

No related posts.

Everyone likes to be invited to a party. I love parties! I don’t even mind if the hostess asks me to bring a dish. If I’m being welcomed to her home to enjoy the festivities, it’s the least I can do. And if it’s a shower, I love to bring baby or bridal gifts for people I love.

Unfortunately, the invitations I usually receive aren’t for parties. They’re for sales ambushes from trusted friends. “Come to my candle party!” is really code for, “Come to my house, eat some appetizers, and buy some overpriced crap out of my catalog so I can get free stuff or money.”

Maybe I’m being a curmudgeon here. It certainly wouldn’t be the first time. The thing is, I don’t want to feel pressured to buy stuff I don’t need, especially when it’s typically so overpriced. Not to mention, it sort of makes me feel bad to know that I’m not being invited to a party simply because the hostess enjoys the pleasure of my company, but because I’m another person who may buy stuff from her.

When I choose to buy something, it’s because I need and/or want it, and I can afford it. I don’t want to feel guilted into buying things because my friend has provided appetizers or drinks, or because I feel responsible for supplementing her income. That’s not how business works. Good business is based on the exchange of money for worthwhile goods or services — not guilt because your friend is trying to start her “home business” if only her 20 closest friends would spend $200 each on the junk she’s selling.

I don’t like when sales people ambush me. I don’t like when they call me, I don’t like when they approach me in the mall, and I don’t like when they knock on my door. The last thing I want is to be solicited by a friend at a party.

If you want to build a business selling products, I don’t begrudge you that. By all means, let your friends know that you have those products available, and the ones who are interested in buying can come to you. But please don’t solicit sales from me under the guise of a get together. I’m too cheap to buy any of your overpriced stuff anyway.

Photo credit

No related posts.

Recreational shopping has always been one of my biggest money drains. I can turn a quick stop at Target for a necessary item into a $40 splurge more easily than I want to admit. It’s a problem that I acknowledge, and I’ve been working to correct it.

We have a lot of things on the “to-do” list for our house – new furniture, a garage door opener, an epic garden, a riding lawnmower, and decorating to name just a few. All of these things are going to cost money. Since our mortgage payment is a bit higher than our rent used to be, our budget is a little tighter these days. Not to mention, I always promised myself that once we bought a house I’d finally buckle down and divert more money toward our student loan debt, so that’s definitely on my mind.

The point is, I certainly can’t afford to walk into Target or sign into Amazon and drop $40-$50 on crap I don’t need. When it comes to money drain, prevention is key. The trick is to avoid your triggers. Here are my main money drains, and how I combat them.

Marketing emails.

Signing up for email updates from your favorite stores and websites can help save money, because it will alert you of sales. It can also be a major money drain. If I receive an email about a big sale, I’m always tempted to buy something because “it’s such a great deal!” – even if I don’t really need anything. If you’re on a tight budget and unnecessary spending is an issue, unsubscribe to all of those emails. If an occasion rises that requires you to buy something, be purposeful about your shopping and seek out sales or coupon codes.

Daily deal alerts.

Daily deal sites like Groupon and Living Social are incredibly popular on frugal blogs right now. It’s true that they can save you a ton of money, but again, you’re not saving if you’re spending money on things you don’t need. If you’re struggling with self control, it may be time to unsubscribe and tune out the “daily deals.”

Recreational shopping.

This is a tough one for me, because browsing is one of my favorite frugal ways to get out of the house in extreme hot weather. I take a walk around a store or mall to enjoy being out and around without sweltering in the heat and humidity. Unfortunately, it usually leads to buying things – or seeing things that I want to buy, which just makes me feel deprived when I have the will power to refuse. I’m still looking for an alternative to this activity when the weather is too hot to get outside. Any suggestions?

The drugstore game.

I’ve amassed quite a stockpile of toiletries and hygiene items thanks to the “drugstore game” – matching coupons with weekly deals at CVS and Walgreens. I’m guilty of buying things I don’t need just to get a deal. Even if it’s a great price, any money you spend to buy things you don’t need is a waste, especially if you’re acquiring more items than you can reasonably use. Remind yourself that there will be deals in the future, and you can stock up again when your supply runs low. Use that money to pad your savings or pay off debt instead.

Plan a menu – and skip boring recipes.

If dining out is a big spending trigger for you, it’s time to get organized and get excited about eating at home. The two biggest reasons people spend unnecessary money on dining out is poor planning and lack of excitement about meals at home. If you frequently head to a restaurant or drive thru because there’s nothing else to eat, try creating a menu plan at the beginning of the week and hanging it on the refrigerator to remind you of what’s for dinner each night. If you plan meals, and still find yourself heading out to eat because tonight’s dinner doesn’t sound appealing, it’s time to shake things up. Try new recipes, recreate your favorite restaurant meals, or add new flavors to old foods. My favorite recipe sites are AllRecipes, Real Simple, and Food Network.

Make your favorite treats at home.

I’ve made no secret about my terrible little Starbucks habit. But when I realized my weekly fancy coffee allowance was turning into a two or three times a week habit, I decided to find another way to indulge. I make iced coffee and smoothies at home now for a fraction of the cost. If there’s an expensive treat you indulge in, find a way to satisfy your cravings at home for less money. Alcoholic drinks are usually way overpriced in restaurants and bars. Mix your own cocktails at home or buy a case of beer or bottle of wine and invite friends to your place instead of going out.

Get organized.

One thing I absolutely cannot stand: losing money due to poor organization. Even if it’s just a 25 cent overdue fine at the library, it is such a waste, because I get no value out of the money. I’m paying for a stupid mistake. Overdraft fees (which do still exist in some situations), late charges for bills, overdue library fines, and expensive repair bills for things that could have been avoided with better care and maintenance all fall into this category. Create a system for reminding yourself of due dates and service appointments for the car and home. Keep a close eye on bank accounts and statements to avoid charges. Keep your emergency fund healthy so you can afford to make repairs before small problems become expensive emergencies. Every penny you avoid losing is a penny in your pocket.

What are your biggest money drains? And how do you avoid them?

Photo credit

No related posts.

If you’re planning to buy a house in the near future, then I’m sure you’ve heard this from a million people already, but I’ll tell you again: it ain’t cheap.

So what does it really cost? Well, you’re probably already saving 5-20% of your purchase price for a down payment and 1-3% for your closing costs. That’s not a small chunk of change. Unfortunately, that’s not all you’re going to need to save. Here are a few of the costs we encountered on our little home buying adventure.

Emergency fund

Up until now, you’ve probably had a landlord. If your heater stops working, you call the landlord, and they send someone to fix it on their dime. Roof leak? Call the landlord. Broken refrigerator? Call the landlord. Now that you’re a homeowner, the landlord is you. Don’t plan on spending every last cent of your savings account to move into your home. As a homeowner, access to an adequate emergency fund is more important than ever. Negotiating a home warranty into your purchase can relieve some of this responsibility for a year or so, but it won’t cover everything. Make sure you have some cash on hand to avoid getting in over your head.

Appliances – $500 and up. The sky is the limit if you want to get fancy Food Network appliances!

These days, the housing market is full of foreclosure properties. Sure, you can get a great house for a low price, but often these homes don’t include appliances like a stove, refrigerator, dishwasher, washer or dryer. Sometimes if you’re buying from a seller instead of a bank, some or all of the kitchen appliances will be included. Sometimes they’re not. We saw several houses that didn’t include some or all of the appliances. In our case, we were lucky to buy a house with a stove and dishwasher. We already own our washer and dryer (bartered from a friend in North Carolina in exchange for moving help). But our home did not include a refrigerator, so we had to purchase one.

Sometimes a good deal can be found at secondhand or consignment shops. However, you are taking a risk that the appliance bought will be missing one or more vital parts. Luckily, no matter what brand — Kenmore, Electrolux, General Electric, Jenn-Air, KitchenAid, and others — it’s usually possible to find replacement parts inexpensively. You may even be able to get an old refrigerator running like new for only a few dollars.

Lawnmower – $200 – $5000

If you’re moving into your first home after living in apartments, you’ve never experienced the joy of yard maintenance. Now instead of cursing the landscapers for kicking up pollen and noisily mowing away outside a few times a month, that will be your job. We have almost an acre of land that’s quickly growing out of control, so we’ll have to buy a mower before we move in.

Window coverings – $200 and up

Some homeowners will leave things like blinds, curtains, or other window coverings that were custom-made for the home. Often they don’t. Because our house was recently remodeled and new windows were installed, there’s nothing covering them. Unless we want to give our neighbors a peep show, we’ve got to invest in some blinds. As much as I love our dramatic, custom windows, I learned the hard way that fancy windows are more expensive to cover. We had to order custom-cut blinds to fit our unique window sizes. If your windows are standard size, mini blinds can be a cheap option to cover your windows until you can save up for something fancier.

Propane – $500 – $1000 depending on the tank size

I’m a city girl, and I assumed that everyone in the world has access to a natural gas line in their homes, and they just receive a heating bill every month. Not so. If you’re moving into a house in the country, you may have a giant propane tank next to your house that needs to be filled. Rates are lower in the summer when demand is lower, and in our case, the first fill has to be paid upfront. After that we can get on a monthly “budget” plan to build a credit and cover the next fill-up.

Optional costs – Prices will vary.

Paint

If you hate the colors the previous owner chose or the paint needs a touch-up, be prepared to invest some money and elbow grease into repainting. Our house was completely repainted as part of the remodel. They’re not the colors I would have chosen, but it’s fresh paint and I don’t hate the colors, so we chose to leave the walls as they are for at least a year or two.

Decorations

If you don’t repaint — or you choose a color much different from your previous home — you may discover that the decorations you bring no longer match your decor. You can always choose to add decorations a little at a time to reduce the upfront cost. If you don’t have the money to decorate right away, be prepared to live with bare walls for a little while.

Furnishings

The square footage of our new home is almost double that of our apartment. When you suddenly gain that much extra space, you realize just how much furniture it will take to fill it. We’ll have to live with an empty den for a while until we can find a nice used sofa or save enough to upgrade our living room furniture and move the old stuff into the den.

Thankfully, we’ve been saving for the past 5 years, so even though we underestimated the amount of cash we’d need to buy our house, we can afford the extra costs. Be sure you count on some extra costs if you’re planning to buy a home.

Photo credit

No related posts.

This post was originally published on May 13, 2009. Now that I’m a stay-at-home mom, this post is truer than ever for me. I needed a reminder of why my priority will always be finding ways to cut our spending instead of increasing our income. I thought I’d share it with you, too.

When you’re working to save money or get out of debt, there are two main ways to do it: spend less and earn more. When you’re struggling to make ends meet, the solution is to cut your spending or find a way to increase your income or some balance of both.

I’ve always favored the spend less approach on my blog and in my life. I’m not a big fan of Dave Ramsey’s advice to go to extreme measures to increase your income. I’d rather work hard to cut spending than pick up a second job or extra hours to increase our income. Here’s why:

My time is worth more than money.

If we took on night jobs or weekend jobs, we could speed up our debt repayment and savings. But at what cost? We’d lose our only real quality time together, our only time to relax and recharge. As I said yesterday, frugality is about improving my quality of life. Working nonstop isn’t what I think about when I think about my best life.

Being short on time can cost money.

When you’re constantly rushing around, you’re more likely to cling to convenience. From picking up take out at the end of a night shift to paying more in childcare to cover your long hours to skipping money-saving habits like menu planning and coupon clipping because you don’t have time, rushing around can get expensive.

Higher income leads to more spending.

Obviously, the point of frugality is to avoid increasing expenses as income increases. But the harder you’re working to bring in that extra income, the harder it can be to tell yourself, “No.”

Even if you can avoid spending money on unnecessary things, there are some natural upgrades that come along with a better income: home ownership, vacations, little luxuries. If you put more of your focus on earning than saving, it’s likely that those little upgrades will add up to a lot of extra spending. By focusing on saving instead of earning, we’re living comfortably without being tempted to splurge to much. As our income naturally increases and we continue to spend less than we make, we’ll find a way to fit these upgrades into our budget.

What about you? Would you rather spend less or earn more?

No related posts.

After looking and looking at all the homes on the market, you finally found one that really feels like it could be home. Don’t relax yet, though. The home buying process has just begun! Hopefully you’ll only have to go through this process once, and your dream house will be yours.

I know this is easier said than done, but it’s important not to get too attached to the house until the deal is done. Not only could something interfere on the seller’s side, but you may discover something about the house that makes it less desirable. If that’s the case, you need to be able to walk away, no matter how great the house may seem.

Here are the final steps to closing the deal:

Make an offer.

Once you’ve chosen a house, it’s time to make an offer. Most of the time, you can offer less than the seller’s asking price, but that will depend on the asking price, your market, and how long the house has been available. Generally, if you’re living in a down market (most markets are down right now) and the house has been on the market for longer than a month or two, you can safely assume that you’ll be able to offer less than the asking price. Your buyer’s agent should be familiar enough with the market in your area to give you some insight and guidance on how much to offer. Now is also the time to ask if you want the seller to cover closing costs. Be sure to write in stipulations that allow you to walk away if the inspection uncovers major issues.

From here there are a few things that can happen. Once you make an offer, the seller can either accept your offer or come back with a counter offer. The counter offer may ask for a higher selling price or change the stipulations of your agreement. If you don’t want to pay more than you offered, you can refuse the counter offer.

The other thing that can happen is another buyer could put an offer in. If their offer is higher than yours, then the seller will obviously refuse yours. If you happen to know a house is receiving multiple offers, it’s best to make your offer very competitive or even offer the asking price depending on how much you want the house. Again, your buyer’s agent will be able to give you some insight to make the best possible offer.

Accept the offer.

If your seller accepts your offer as is, or you accept the counter offer, then you’re officially under contract to purchase the house. Once the offer is accepted, another buyer cannot outbid you. Your offer should have included provisions that allow you to break the agreement without penalty if the inspection uncovers problems. Once the offer is accept, you’ll need to put down earnest money. The exact amount will be specified in the offer, and it can range from $500 to $1500. This money goes toward closing costs or your down payment at closing.

Schedule an inspection.

Your buyer’s agent will likely recommend an inspector. It can create a conflict of interest for the agent to recommend an inspector, because the agent doesn’t want the deal to fall through, so he or she may recommend an inspector who isn’t as thorough. Personally, I think in most cases, a buyer’s agent wants to protect your interests. His or her reputation depends on honesty with clients, so in most cases, I think they want you to know if the house is a bad deal. If you want to be safe, though, search for another inspector to make sure you’re getting an honest report on the house.

A good inspection generally costs $300-$400, and you’ll have to pay for it upfront. Do not skimp or skip the inspection! Spending $400 to have an expert thoroughly inspect your home could save you thousands.

Request repairs.

If the house is newer construction, it’s likely that you’ll get a clean inspection report. If that’s the case, then great! You can continue the process without worry. However, if the report uncovers any issues, now is the time to walk away or negotiate. If the issues are minor and can be fixed, you can request the seller to repair them before closing. If they’re extensive (major termite damage, structural issues, etc.), it might be time to walk away. A good inspector can tell you whether the issues are major enough to warrant walking away.

Keep in mind, once an inspection uncovers an issue with the house (such as termites or mold or any number of problems), the seller will have to disclose that issue to potential buyers in the future. That means you have an advantage in negotiations. In most cases, the seller would rather fix the problems and sell to you than put the house back on the market and disclose any problems to other buyers who likely won’t be interested. Most problems can be repaired, so consider asking the seller to repair them before closing or negotiate a lower purchase price to offset the money you’ll have to spend on repairs.

Notify your lender that you’ve found a house.

Once you’re satisfied with the condition of the house, it’s time to notify the lender who preapproved your mortgage. Let your lender know that you’ve found a house, you’re under contract, and you’re ready to move forward.

Schedule an appraisal.

At this point, your lender will want to schedule an appraisal to ensure that the house is worth the purchase price. Depending on your mortgage company, the amount for the appraisal ($300-$400) will either need to be paid upfront or it can be rolled into closing costs and paid at closing. Your lender will be able to let you know.

Choose a provider for your homeowners insurance.

Even though it’s part of your monthly mortgage payment, finding a good deal on homeowners insurance is up to you. Prices for comparable coverage can vary greatly from company to company, so don’t accept the first quote you find. Get several quotes from providers in your area to find the best deal. You can often get a discount for carrying auto insurance through the same provider as your homeowners insurance, so ask what the rate for both would be if you agreed to switch.

Close!

Once the appraisal is finished, it will likely take a few weeks to close even under ideal circumstances. Now it’s time to start packing! Your lender will finish processing the loan, and once a closing date is determined, they’ll let you know. If the seller isn’t covering your closing costs, be prepared to pay an additional $2000-$5000 on top of your down payment at closing.

Do you have any tips for first-time homebuyers?

Photo credit

No related posts.

Now that you’ve saved up for your down payment and closing costs, cleaned up your credit report, and you’re prequalified (or preapproved) for a mortgage, it’s time to find your home and close the deal. This is the fun part! But it can also be overwhelming. It doesn’t have to be hard, though. Here are some steps to keep it simple.

Narrow down your “must-haves.”

Depending on the size of your market, you may want to start looking at all the houses in your price range. But if you’re living in a large market or open to several different locations, narrowing down your options is essential. How many bedrooms do you need? Is a big kitchen important to you? What kind of neighborhood do you want? You might not be able to find a house with everything you want, but if you prioritize, you should be able to find a house with your “must-haves.”

Search the MLS.

MLS listings are available on many real estate websites. You should be able to search for your criteria in all the homes currently on the market in your area. You or your buyer’s agent can create alert emails that will notify you when houses in your price range with your criteria become available or lower in price.

Weed out the homes that won’t work for you.

Once you have a list of all the homes in your market that loosely fit your needs (3 bedroom, 2 bathroom homes in your price range, for example), start looking at them more closely. View the address on a map. Is it in a desirable area? Is there a highway in the back yard? (That was the case for a surprising number of the homes in my search.) It’s not a bad idea to drive through some neighborhoods if there are multiple homes on the market in a specific area. I found that many of the homes looked really nice in pictures, but not so great in person. Take those homes off your list before you start scheduling viewings to keep things as simple as possible.

Schedule viewings.

Now is the time when a buyer’s agent comes in handy. Your agent will typically need to give 24 hours’ notice to the seller before a viewing. Make a list of 5-10 houses that fit your requirements.

If you’ve found a large number of houses that you’re interested in viewing, start with the homes on the lower end of the price range. If a less expensive home will work for your family, there’s no need to look at fancier houses. You may discover that these homes won’t actually work for you, and if that happens, you can always schedule viewings for more expensive homes later. Try to keep the number of homes you view in a single day under 10 to avoid overwhelming yourself.

Take notes and pictures.

When you start touring houses, it helps to make note of everything that strikes you. Note the pros and the cons of each home, and start with a fresh sheet of paper at every house to stay organized. Chances are the real estate listing page will have plenty of photos to jog your memory, but it can’t hurt to bring a small digital camera for some snapshots. It also helps me to write down pertinent information from the listings on my own notepad (such as price, square footage, and other information) for easy comparison.

Assess and repeat.

Now it’s time to look at your options and decide if any of these homes are right for you. This can be a very difficult balance. On the one hand, you may be absolutely in love with a home, but you’re hesitant to make an offer because you want to know what else is out there. On the other hand, maybe you’re not thrilled about any of the houses, but you feel like this is all that’s available and you feel pressured to settle. Don’t let either of these mindsets sabotage your home search!

If you find a house that you love in your price range, don’t feel like you should wait! Even in a slow market, a great house can be sold right out from under you. If you love it and you can afford it, then it’s time to make an offer. Take a night to sleep on it, but if you’re still feeling strongly about that home in the morning, chances are you won’t regret making an offer.

But remember, you still have options if you don’t love anything that you’ve seen. Even if you don’t have a long list of houses you still want to view, you could always expand your search to nearby cities or wait a little while for something else to come on the market. It’s better to keep renting for a little while longer than purchase a home that you don’t love. If you haven’t found the house, then repeat these steps and keep looking until you do.

Next time we’ll discuss the final steps of the homebuying process.

Photo credit

No related posts.